HARLEM — State Attorney General Eric Schneiderman said his investigation of the group responsible for distributing $150 million in funds from Columbia University's community benefit agreement with West Harlem found no criminal wrongdoing but that the organization's board of directors was in disarray and failed to develop proper policies and procedures related to distributing the money.

The West Harlem Local Development Corporation came under scrutiny last year after DNAinfo.com New York reported that it had spent more on consultants — two of whom left with six-figure paydays before their goals were accomplished — than programming. At the same time, the organization failed to complete basic tasks such as hiring a director, locating a work space, holding a public meeting and launching a website.

From 2009 to 2011 the agency issued one grant for just over $300,000, the attorney general's office said. Only three grants have been issued in total.

The WHLDC "was hindered by the board of directors’ failure to develop clear policies and procedures for grant-making activities in conjunction with the Fund for the City of New York (FCNY), WHLDC’s 'fiscal sponsor,'" the attorney general's office said.

The disorganization and delay in releasing grants caused "confusion and concern" in the West Harlem community, the attorney general's office said.

Under a settlement agreement with the attorney general's office, the WHLDC will bar agency officials "with a direct or indirect connection to a grant applicant from participating in decisions regarding its application," and provide public disclosure and financial accounting of all grants awarded.

The agency will begin issuing grants using the new review process next year.

“Charitable organizations have a responsibility to deliver their intended benefits to carefully evaluated applicants, while ensuring that their grant-making processes are open, transparent and free of conflicts of interest,” Schneiderman said in a statement.

The WHLDC must also perform proper due diligence on all grant recipients and monitor the grants while in progress.

The WHLDC hired a director, found a headquarters and launched a website in the summer of 2012.

The organization had received $6.55 million from Columbia as of October and has distributed only three grants totaling $1.14 million, all but $85,000 of which has gone to the city's summer youth jobs program to employ local young people.

The agency has spent $730,000 on consultants, salaries, office lease and equipment and money management fees.

WHLDC Executive Director Kofi Boateng hailed the end of the investigation and the settlement agreement.

“We shall continue to live by the tenets of communication, transparency, and accountability. The clarity of the end of the investigation by the OAG is a measure of confidence from which we cannot afford to falter,” Boateng said in a statement.

Vince Morgan, a banker and former congressional candidate who raised concerns about the WHLDC's functioning last year, said he hoped the new conflict of interest policy would make the group more responsive to the community.

"It was the elected officials and a small group of people around them that influenced the decisions, not the community," Morgan said of the way the WHLDC has functioned in the past.

Two of the consultants that left with six-figure paydays had strong ties to former Mayor David Dinkins.

Dinkins, along with U.S. Rep. Charles Rangel, Basil Paterson and the late Percy Sutton, comprised "The Gang of Four" when Harlem was the base for black political power in New York. Rangel originally appointed several of the WHLDC's board members and has vehemently defended the agency.

"I'm thankful the attorney general took the time to look into the matter or we might have still been stuck in a quagmire," Morgan added. "Maybe now they can distribute the money that is so desperately needed in this community."

The attorney general's office also approved the WHLDC's request to transfer all assets to a new non-profit known as the West Harlem Development Corporation. The Fund for the City of New York will no longer serve as the group's fiscal sponsor. The Tides Center and Tides Foundation have been hired to serve in that capacity.

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